Falkland Oil and Gas (FOGL) is to farm-out an interest in its Northern Area Licences to Noble Energy which should 'substantially' improve the group's financial position.
Noble will farm-in to the Northern Area Licences for a 35% interest except for two excluded areas. FOGL, which is currently the operator, will transfer operatorship to Noble in early 2013.
FOGL retains a 40% interest in the Northern Area Licences (75% in the excluded areas), while Edison International holds a remaining 25% stake.
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Noble will also farm-in to the Southern Area Licences for a 35% interest and will become the designated operator by early 2014.
"We have now brought in two highly respected international exploration and production companies and with this strong partnership in place, we have the financial and technical resources to help realise the potential from our large acreage position in the Falkland Islands," said FOGL Chief Executive Tim Bushell.
As part of the agreement, Noble will contribute a substantial amount of the costs on both Northern and Southern Area Licences. Its total investment over the next three years is estimated to be $180-230m.
FOGL said: "This farm-out brings in another significant industry partner for FOGL whose interests and expertise complement those of Edison. The farm out substantially improves FOGL's financial position. In the event that the Loligo and Scotia exploration wells are drilled within budget, it is estimated that on completion of the wells the company's cash balances will not be less than $200m which will provide the company with significant funds for additional exploration work."
In a separate statement, the firm said that its Loligo exploration well 42/07-01, located 200km east of the Falklands, was spudded on Friday. FOGL is the operator of the well with a 75% interest.
Operations at the well, which is the first of a two-well exploration programme, are expected to last for around 60 days.
By 08:10 on Monday, shares had jumped 9.33% to 82p.
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